Approximately 16 million Americans suffer from diabetes - one half of them estimated to have undiagnosed disease. Diabetes disproportionately affects low-income and minority populations and is one of the six target conditions under the President s Initiative to Eliminate Racial and Ethnic Disparities in Health. While diabetes has to potential for severe and long-lasting health complications, the condition can be well-managed on an ambulatory basis. Treatment of diabetes is marked by clear guidelines on the appropriate content of care, and wide variation in the extent to which these guidelines are adhered to in practice. There are high potential costs associated with inadequately treated diabetes, which makes improving quality of ambulatory services for diabetes a priority. In order to improve the care received by patients with diabetes, it is necessary to monitor the quality of care across many settings, routinely and at low cost. This research will use the Medicaid SMRF data sets from 6 states to develop a claims and administrative record-based system for measuring the quality of diabetes care. This study will: 1. Develop a set of quality care measures for diabetes based on information reported in claims files. 2. Assess the ability of these measures to reflect variations in the quality of care. 3. Identify patient and environmental characteristics that correlate with variations in the quality of care received by diabetic Medicaid patients. 4. Validate these measures by showing they are associated with other outcomes for diabetes care, such as hospitalization.